HC ROI for Zagorka, 2007-2011

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As part of the article on Human Capital Return on Investment here we continue the analysis of the Bulgarian brewing industry with information about Zagorka.

HC ROI for Zagorka, 2007-2011

HC ROI, Zagorka, 2007 – 2011

HC ROI, Zagorka, 2007 – 2011

The data show much higher operating income (in green) with fluctuations and an overall downtrend. Despite this, however, even the lowest income level in 2011 is above Kamenitza’s performance. The trend is obviously one of falling income, which, together with the overall decline in the consumption of beer in Bulgaria indicates a somewhat alarming trend for the company. The positive impression comes from the wide margin between income and expenses (in blue and purple, respectively), which enables the company to retain stable profits throughout the period (not shown on chart). This, together with the lack of abrupt changes in remuneration costs (in purple) and a relatively stable headcount (the numbers in the blue cells) results in a remarkable HC ROI. It would be interesting to compare this information with industry data for companies operating on markets other than Bulgaria. Should such data be available, it would be advisable to calculate the average revenues generated by the sales force to see their efficiency and set guidelines for changes in the organization of operations and focus on the building of new sales skills. These findings can be further elaborated through comparison with rival data.

And one more thing as a proof that indicators are not necessarily unequivocal and most often when data is analyzed several different metrics need to be combined with a good knowledge of changes in the respective business: HC ROI for 2011 is at its lowest rate for the period, while the average salary (about BGN 2 300, not shown on chart) is at its highest. I assume there are two reasons for this: firstly, a gradual shrinking of workforce throughout the year, and secondly, a decline in the number of lower paid employees which, together with the decrease in revenue, results in a lower HC ROI. Or could this be an example where job cuts do not necessarily translate into cost optimization?

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